Greggs expects to report 2025 sales of £2.2bn, reflecting 2.4% like-for-like growth in company-managed shops. Fourth-quarter growth was 2.9%, accelerating from 1.5% in the previous quarter, helped by market share gains.
Across the year, there were 121 net new shop openings, bringing the total to 2,739 stores. Greggs is targeting around 120 net new openings in 2026 (134 expected).
Year-end net cash came in £78mn lower at £47mn. The group expects significantly lower levels of capital expenditure in 2026.
Management expectations for full-year pre-tax profit remain unchanged. The consensus forecast stands at £173mn (2024: £190mn). In 2026, underlying profits are expected to remain at 2025 levels, compared to market expectations for growth of around 4%.
The shares were down 3.3% in early trading.
Our view
Greggs saw sales pick up slightly over the final quarter, giving management the confidence to reiterate 2025’s profit guidance ahead of full-year results in March. But markets focused on the outlook for 2026, and talk of cost pressures alongside cautious profit guidance sent the shares falling on the day.
There’s no escaping the fact that the wider environment is a challenge. UK economic growth is slowing, consumers are more conscious of their spending, and costs have been dealt an unhelpful hand from changes to tax rules and minimum wages.
The cost picture is likely to remain a key challenge this year, though there is now expected to be a slight easing of inflation – the first positive development on costs for a while.
Price hikes are being leaned on to help provide an offset and have been the main driver of like-for-like sales growth. But Greggs needs to ensure price increases don’t exceed customer appetite.
Despite the challenges, Greggs is working hard to build the foundations for future growth. The number of shops is set to rise to 3,000 over the next few years. Net openings for 2025 have come in a little lower than planned, but that should be more down to timing than an indication that the expansion strategy is slowing.
Menus are being adapted to changing customer preferences, and Greggs is opening later to attract more evening customers – the group’s fastest-growing daypart. Greggs has also worked hard over the last few years to increase the number of franchised shops to around 20%. We support this model. These locations avoid day-to-day costs and continue to outperform company-managed sites.
But the store expansion programme and setting up two new distribution centres have been costly. 2025 looks to have been the peak year for these types of investment, but it’s likely to be 2027 before they start driving major benefits.
Having a healthy balance helps, with a small net cash position currently. There’s plenty of liquidity on hand, so we’re not concerned about the group’s financial position. Lower planned investment levels next year also mean the prospective 3.9% dividend yield looks achievable with scope for improved payouts further down the line. But as always, no shareholder returns are guaranteed.
We still like the underlying business, including its list of growth drivers, and soft performance last year means an attractive entry point is on offer. But the near-term outlook for consumer spending has started to raise some questions, potentially weighing on cash flows in sales dry up.
Environmental, social and governance (ESG) risk
Consumer services companies are medium-risk in terms of ESG, and very few companies are excelling at managing them. That leaves plenty of opportunity for forward-thinking firms. The primary risk-driver is product governance. The impact of their products on society, labour relations and environmental concerns are also key risks to monitor.
According to Sustainalytics, Greggs’ management of material ESG issues is strong.
Greggs’ overall ESG reporting is not up to par with leading reporting standards, though it has appointed a board-level responsibility for overseeing ESG issues. A very strong environmental policy and a decent whistleblower programme are in place. Executive-level compensation could benefit from some elements being explicitly linked to sustainability performance targets.
Greggs key facts
All ratios are sourced from LSEG Datastream, based on previous day’s closing values. Please remember yields are variable and not a reliable indicator of future income. Keep in mind key figures shouldn’t be looked at on their own – it’s important to understand the big picture.
This article is original Hargreaves Lansdown content, published by Hargreaves Lansdown. It was correct as at the date of publication, and our views may have changed since then. Unless otherwise stated estimates, including prospective yields, are a consensus of analyst forecasts provided by LSEG. These estimates are not a reliable indicator of future performance. Yields are variable and not guaranteed. Investments rise and fall in value so investors could make a loss.
This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment.